In the United States, women entrepreneurs exist in a dichotomous zone—it is the best country on the planet for women entrepreneurs, but deep, pre-existing gender and economic inequalities have been widened by the COVID-19 pandemic. The pandemic has been especially catastrophic for Black women entrepreneurs. However, now is the time for Black women to double down on entrepreneurship and for the United States to support them.
Pre-COVID, Black women led the charge as the fastest-growing entrepreneurs in the United States. Between 2018-2019, Black women started a whopping 763 businesses per day, compared to 192 per day for white women, 265 per day for Asian-American women, 557 per day for Hispanic/Latina women, 30 per day for Native American/Alaska Native women, and 10 per day for Native Hawaiian/Pacific Islander women. Black women also start businesses at six times the rate of white men.
This activity was good business for the United States. Last year, women of color entrepreneurs generated more than $400 billion for the American economy, and Black women accounted for the largest demographic segment in this group.
Black women were on a roll going into 2020—pursuing economic independence and generating much-needed revenue and jobs for the economy. They managed to do what they have done for generations and make a way out of no way.
As COVID-19 began disrupting the U.S. economy in 2020, entrepreneurs and small businesses were hit especially hard. Scientists estimate that hundreds of thousands or millions of businesses have been permanently shuttered by COVID-19. This includes the closing of 41% of America’s Black owned-businesses (more than double that of white businesses) and 25% women-owned businesses.
For the U.S. to climb out of the enormous economic hole created by COVID-19, it needs entrepreneurs to both reopen old businesses and start new businesses. And Black women, with their history of entrepreneurial dynamism, should play a key role in the country’s economic revitalization.
Research shows that an additional 6.1 million American jobs a year and $13 trillion in business revenue could have been generated over the last 20 years if Black entrepreneurs had equitable access to credit. In addition, if women and men participated equally as entrepreneurs, global GDP could ultimately rise by $2.5 trillion to $5 trillion.
To best leverage the intersectional skills and abilities of Black women entrepreneurs, the U.S. must take strides to create a mutually beneficial relationship that supports both business growth and long-term sustainability.
One commonly held belief in the U.S. is that small businesses and startups create most of the country’s private-sector jobs. However, recent research by the National Bureau of Economic Research shows that the real key to enduring job growth is the age of a small business venture. In other words, it is not merely enough to encourage business creation—there must be specific policies and support networks created to ensure that business’s longevity.
In a country where more than 21 million people are collecting some form of unemployment benefits (nearly 15 times the numbers just one year ago), entrepreneurship can be one of the vaccines needed to combat COVID-19. This is especially true for Black women, who have consistently suffered from the highest unemployment rates during the pandemic.
For entrepreneurship to serve as an effective vaccine, however, Black women entrepreneurs will need support that they have not historically received, especially as it relates to funding. Capital is an indispensable necessity for entrepreneurs, and Black women have not received equitable access to America’s well-resourced investor networks that are largely populated with white men.
For example, Black women founders received only 0.0006 percent of the total venture capital raised between 2009 and 2017, despite often providing a higher return on investment than other groups. And, this year, less than 0.5 percent of the $670 billion Paycheck Protection Program (“PPP”) funding went to Black women entrepreneurs.
In the words of one popular colloquialism, Black women entrepreneurs in the U.S. have long been forced to make a dollar out of fifteen cents.
The good news is that Black women entrepreneurs are dynamic, innovative, and capable of pivoting even in a pandemic. Indeed, success stories abound.
Black women entrepreneurs like Danielle Leslie, Rachel Rodgers, and Teri Ijeoma have publicly posted on social media about having million-dollar months during the pandemic. Black women-led startups are partnering with HBCUs to provide internships, delivering groceries to food-insecure seniors, and contextualizing the Black innovation economy with data. These kinds of businesses are the fuel that will power the country’s economic recovery.
The U.S. will be well-served by supporting Black women entrepreneurs. This support could include:
- Creating federal relief vehicles for funding that better align with small businesses led by Black women entrepreneurs;
- Reducing the barriers of intellectual property ownership by expanding the United States Patent and Trademark Office’s Patent Pro Bono Program; and
- Tracking VC data, including investor diversity, investment diversity, and deal pipelines, and retooling Securities and Exchange Commission policies.
Developing equitable policies for Black women entrepreneurs is not merely charity work or the right thing to do. Data shows that Black women are the most entrepreneurial demographic group but also the least supported in the traditional entrepreneurship ecosystem. In this COVID-19 era, the U.S. must leverage its best and brightest to save businesses, jobs, and the economy. And Black women entrepreneurs shine among that group.
Shontavia Johnson is a faculty member and administrator at Clemson University who has also founded the Brand and Business Academy, an online community that gives women of color their own formula for entrepreneurship.